Britain benefits from weaker euro in fertiliser markets
The new fertiliser season, which began in late May, has seen Britain's growers paying some 5% less than last year; while their counterparts in mainland Europe are facing 5% higher prices, says Ken Bowler, Marketing Manager for GrowHow UK.
For the coming season, Mr Bowler believes that currency movements will exacerbate an already volatile global market as the relative strengths and weaknesses of the US dollar, sterling and the euro continue to be in flux.
Speaking at Cereals 2012, Mr Bowler said: "A lower opening price has encouraged a brisk start to the season with growers ordering at least some of their requirements for the coming year to take advantage of lower prices.
"The weakness of the euro against the dollar has currently made urea less competitive and this, in turn, is likely to have an effect on the availability of imports as the market turns to ammonium nitrate."
Britain's growers will continue to benefit from GrowHow UK's operations which are dedicated to supplying British growers with ammonium nitrate from its two manufacturing sites at Ince, Cheshire and Billingham on Teesside.
Illustrating the effects of currency, Mr Bowler points to the price movements in urea since September last year. In dollar terms, it has come back some 15%; in sterling it is back around 7%; whilst in euros, the price has risen about 1%.
"It is too early to predict how the whole season will develop, particularly as issues concerning the future of the euro continue to play out," says Mr Bowler.
"Meanwhile, India is reported to be about to place a very large urea order of over 1million tonnes. This will affect the market and availability in the short term.
"While global demand appears to be continuing to increase at around 3% a year, there is talk of increased capacity coming on stream, but some of this keeps being delayed by teething problems during commissioning, and forecasting its effect on pricing remains uncertain.
"Supply is also likely to continue to be affected by availability of gas. For instance, Pakistan has imported far more nitrogen fertiliser than normal due to internal shortages of gas."
In the face of so many conflicting market drivers, GrowHow continues to advise farmers to plan fertiliser purchase across the season to spread the risk of fertiliser price movements.